It used to be, not that long ago, that companies utilized non-compete agreements only for their executives, high paid employees, and salespeople. That is no longer the case. Instead, non-compete agreements are being used by numerous companies and are being used for employees that are way down the food chain, including for low-level entry employees, receptionists and the like.
These agreements are becoming commonplace, but there still seems to be a lot of uncertainty about what is enforceable. Employers and employees all seem to be confused about the different rights available to employers and employees alike for more check this out https://theeastmanlawfirm.com/.
What is a Non-Compete Contract?
A non-compete agreement is one, at its simplest, that limits the employee’s ability to work in a specified industry, within a specified area, for a period of time after they leave employment. These three elements must be set forth within the agreement so that it is enforceable. The industry needs to be specific to what the employer actually does (and, if possible, to what the employee actually did). Further, there is a geographic element that is applied, which is industry specific. For example, a local chiropractic office may be limited to a maximum of ten (10) miles, while a regional company (think a car parts distributor) could have a larger radius. Finally, there is a timeframe element. The shorter the timeframe, the more enforceable it would be.
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Is a Non-Compete Agreement Enforceable.
The short answer is yes, as long as they are reasonable. In Healthcare Servs. Of the Ozarks, Inc. v Copeland, 198 S.W.3d 604 (Mo. 2006) the court stated that “In practical terms, a non-compete agreement is reasonable if it is no more restructure than is necessary to protect the legitimate interests of the employer.” However, an employer needs to have more than a general goal of preventing competition. See Whelan Sec. Co. v Kennebrew, 379 SW3d 835 (Mo 2012). One legitimate interest is in protecting their customer contacts or trade secrets, which both can be used to provide justification for a non-compete. One thing to note is that it is the employer that bears the burden to prove that the non-compete agreements is reasonable and protects valid interests of the employer.
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What is Considerable Reasonable?
Unfortunately, there is no specified rule that says what is reasonable and what is not. Courts look at each agreement and the terms and conditions of the agreement, plus the role that the employee was in and the employee’s history with the employer. Osage Glass, Inc. v Donovan, 693 (SW2d 71 (Mo. Banc 1985)(the court enforced a non-compete that prohibited the former operations manager from working for a competitor for three years); Mid-States Paint & Chem. Co, 746 SW2d 617)(the court enforced a non-compete against a salesman for a two-year period within 125 miles of the employer); All type Fire Protection Co. v. Mayfield, 88 SW3d 120 (Mo. App. 2002)(the court enforced a two-year agreement within 100 miles of the employer for a customer service representative).
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What happens if the Contract is Overbroad?
It is still likely enforceable. The courts will likely revise the agreement to a reasonable time and area for the employee, but no invalidate the agreement altogether.
What’s the difference Between Missouri and Kansas?
The biggest difference is that Missouri has a statute on non-compete agreemssents. Kansas does not. That said, Kansas courts have been generally more willing to enforce the terms of a non-compete.
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Courts are starting to go the Other Way
Some states are starting to push back against the enforceability of non-competes against low-level employees. Maryland even passed a law, effective October 1, 2019), which restricts any competitive agreements to those employees that make more than $15/hr. Courts are starting to become less willing to enforce non-competes against low-wage employees for more information check out this link https://kcbusinesslawgroup.com/.
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